Reports of Amazon.com, Inc.'s AMZN interest in taking over empty store space in Simon Property Group Inc SPG malls are "absolutely true," Scott Crowe, chief investment strategist at Center Square Investment Management, said on CNBC.
What Happened: Simon Properties, the largest mall owner, likely resisted the idea of allocating space to Amazon, Crowe said. But now Simon needs to change its attitude as recognize it needs to start "swimming with the tide" and accept the clear trends in retail.
Specifically, one-third of all goods travel through a distribution warehouse versus a physical retail storefront and this number will merely increase to as much as 50%, he said.
Why It's Important: Simon and Amazon can work together is part of a win-win relationship. Amazon could buy empty space in Simon's malls that were left vacant and inject new revenue for Simon.
At the same time, Simon offers Amazon access to being closer to the end consumer as most major malls aren't far removed from major population centers.
What's Next: Malls are becoming more obsolete as time passes and the inclusion of an Amazon warehouse or pickup center could inject some life back into malls, Crowe.
"Malls are becoming irrelevant; this brings them closer to relevancy," Crowe said.
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